USD/CAD - Loonie Trades Sideways

The Canadian dollar continued to trade sideways against its U.S. counterpart before the North American open. With the move away from safe-haven strategies that the market was taking last week and an unwinding of those asset classes, the loonie may find itself under some short-term pressure. Last week the loonie traded in a 150 basis point range of $1.2624 to $1.2752, as first resistance is currently at this level of $1.2738 ($0.7850) while support is at $1.2698 ($0.7875). Biggest risk event this week for the Canadian dollar will be Friday's Consumer Price Index numbers; the inflation data will be closely watched in anticipation of the September 6 rate decision from the Bank of Canada.

U.S. equity futures are pointing to a higher open after last week’s risk-off mood subsided after U.S. officials over the weekend eased fears of war. Havens such as Treasuries, gold, and the Japanese yen have all fallen. As the fear of a nuclear war abates in the Korean Peninsula, the market will be waiting for the release of a slew of U.S. economic data out tomorrow including Retail Sales, Import and Export Price Indexes, Empire Manufacturing, NAHB Housing Market Index and Business Inventories. The greenback will trade on the broader market sentiment today.

Experts expect a range today of $1.2665 to $1.2753

There is no event risk today in the U.K., leaving the pound to trade on broader sentiments. There will be more action mid-week for the sterling to trade on beginning tomorrow when Consumer Price Index release, then on Wednesday employment data followed by Retail Sales on Thursday. The sterling is currently trading at 1.6499.

Observers expect a range today of $1.4959 to $1.5010

Euro-zone Industrial Production in June fell below expectations of -0.5% m/m and 2.8% y/y and printed at -0.6% m/m and 2.6% y/y. This did not shake the market as fundamentals have recently been ignored. Investors will see if this trend breaks with the upcoming heavy hitting data being released beginning with German Gross Domestic Product on Tuesday, Italian and euro-zone GDP on Wednesday, then euro-zone Trade Balance and CPI on Thursday. The euro is currently trading at $1.4980.

Those in the know expect a range today of $1.6448 to $1.6516

The Australian dollar returned all of Friday’s gains and trades lower after the release of weak data from China. Chinese Industrial Production, Fixed Asset Investment, and Retail Sales figures released overnight all missed the targets. That combined with the softer sentiment in the commodity space, especially in copper, further puts downwards pressure on the Aussie. Risk event will be tonight’s Monetary Policy Meeting Minutes at 9:30 p.m. EDT.

Oil (WTI): $48.80 U.S. per barrel

Gold: $1,280.68 U.S. per ounce

Silver: $17.02 U.S. per ounce

Copper: $2.9006 U.S. per tonne

Dollar Index: 93.35

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